Existing Home Sales Dip, But Pricing Firms Up - July 19, 2012

Existing home sales prices continued to trend upwards, but sales eased somewhat last month, in a mixed report that runs slightly counter to the prevailing uniformly good news on the housing front.

Specifically, the National Association of Realtors (NAR), a major real estate trade group, reported that completed sales transactions of single-family homes, townhouses, condominiums, and co-ops fell by a surprising 5.4% in June, to a seasonally adjusted annual rate of 5.37 million homes. That was down from an upwardly revised sales rate of 4.62 million properties in May. However, the June rate was still modestly above the year-earlier level of 4.18 million homes sold.

According to the NAR, the report indicated inventories fell last month, which, in turn, is helping to put some floor under prices. The price improvement also helps to lessen the number of distressed properties on the market and in the sales mix.

In all, the national median of existing home prices came to $189,400 in June, up 7.9% from a year ago. This gain made it four back-to-back monthly price increases in a row from a year earlier. We need to go back some six years since the last time we saw such a steady firming.

As to inventories, they fell another 3.2% last month, to 2.39 million homes available for sale. This equates to a 6.6-month supply of unsold homes at the current sales pace. A year ago, by comparison, the inventory of unsold homes came to a 9.1 month supply. A rate of some six months is considered healthy.

Finally, sales dipped by 11.5% in the Northeast, by 1.9% in the Midwest, by 4.4% in the South, and by 6.9% in the West. On the whole, it was a slightly disquieting report, given the lower volume, but not one that changes the basic fact that housing is finally on the mend on a long-term basis.

At the time of this article's writing, the author did not have positions in any of the companies mentioned.